Hunnu victory for Perth mining set

Hunnu Coal’s shareholders have been offered almost $500 million cash just 18 months after Perth-based advisory firm Garrison Capital and its Mongolian partners listed
Hunnu Coal
to raise $20 million.

It’s a stunning result that has all the hallmarks of the Garrison Capital strategy.

“We’ve done 15 companies now. They have either been initial public offering or reverse takeover, and they either go to takeover or the management we put in takes it another direction," Garrison executive chairman
Matthew Wood
told The Australian Financial Review yesterday.

“At the end of the day, everyone does pretty well out of it."

Of the 15 companies that Garrison has had a hand in, four have now been bought out in conventional takeovers.

It’s a winning strategy that has seen Garrison Capital partners benefit substantially from takeover deals.

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“We look at assets globally and put these sort of deals together and take them to a point where everyone is a winner," Mr Wood said.

He is a long-term advocate of Mongolian coal and was part of the early rush to explore prospective tenements three years ago.

He has likened the vast Mongolian countryside to Western Australia during the 1970s.

But Hunnu’s success makes it a standout among its fellow Australian listed peers, Aspire Mining and Xanadu Mines.

As coal juniors scrambled to secure mining tenements in Mongolia in 2008, Hunnu’s Mongolian management team had local knowledge on their side.

“I went to Mongolia three years ago and Hunnu’s managing director George Tumur and I put some assets together for Hunnu," Mr Wood said.

“After raising $20 million we went out hunting for projects."

Mr Tumur, a Mongolian citizen had assembled a local management team and gradually the pair amassed a suite of thermal and metallurgical coal assets.

“We didn’t really face serious challenges because Hunnu is a Mongolian company run by Mongolians," Mr Wood said.

“Hunnu Coal is not foreign guys with a vehicle going up to Mongolia; it’s a Mongolian company that has listed on the Australian Stock Exchange for funding."

Garrison Capital, with offices in Mongolia, Hong Kong and Australia, is a partnership between Mr Wood, Mr Flavel and fellow directors Brian McMaster and Scott Funston.

The team is responsible for a suite of Australian-listed miners that cover a range of commodities. These include Avanco Resources, Copper Range, Laguna Resources, Lindian Resources, Oakland Resources, Signature Metals and fellow Mongolian explorers Voyager Resources and Haranga Resources.

In an interview with The Australian Financial Review earlier this year Mr Wood said Mongolia’s strategic location next to China, coupled with its mineral wealth, make the nation an ideal destination for minerals investment.

It’s clearly a view shared by Banpu.

The Thai company first eyed opportunities in the region in 2008. However, its first investment in Mongolia wasn’t made until 2011 when the Thai company took a $45 million stake in Hunnu.

Speaking to The Australian Financial Review in an earlier interview Banpu chief executive officer Chanin Vongkusolkit said: “Mongolia has very good coal reserves. They have some coking coal and we wanted to get to know some assets".

“Banpu views [the Hunnu investment] as a lower-risk way to get to know Mongolia."